Aussie And Kiwi Mildly Higher In Steady Markets

Markets opened rather steady this week with mild strength in Kiwi and Aussie. The New Zealand dollar is lifted by PPI data. PPI outputs rose 1.0% qoq in Q2 versus expectation of 0.7% qoq. That's a surprised acceleration from Q1's 0.8% qoq. PPI input moderated to 0.6% qoq as expected, from Q1's 0.8% qoq. RBNZ governor Wheeler will speak tomorrow on entitled "explaining the role of macro-prudential policy" and could try to verbally cool down the Auckland and Canterbury housing markets. Aussie also extended recent recovery as markets are preparing for tomorrow's RBA minutes which might signal that the rate cut cycle is over and the central bank is not in rush to cut rates from record low of 2.50% again. Released early this month, the quarterly policy statement projected that Australian GDP would grow 2.25% in 2013 calendar year, slowing down from 3.6% in 2012.

In Japan, trade deficit widened to JPY -0.94T in July versus expectation of JPY -0.73T. In non-seasonal adjusted term, trade deficit widened to JPY -1.024T. Note that expected rose 12.2% yoy, the fastest pace in nearly three years. Imports, also rose 19.6% yoy, largest gain in three years. The jump in imports were led by weak yen, which means higher costs for imports of petroleum as well as food. And, the trend would push up imported inflation in the coming months. Export growth was solid but missed expectation. There were concerns that Japan won't return to a trade surplus within a year or two.

In UK, the Confederation of British Industry raised growth forecast for 2013 to 1.2%, up from prior 1.0%. 2013 growth projection was also revised up to 2.3%, up from prior forecast of 2.0%. CBI noted that the UK economy has "started to gain momentum and confidence is picking up". Nonetheless, it would like to see a "full-blown rebalancing" before calling it a "sustainable recovery". And, it hoped that increase in business investment and trade would begin to emerge in 2012 as Eurozone starts growing again. It expected business investment to contract -2.8% in 2013 and bounce back by growing 7.3% in 2014. Released today, UK Rightmove house prices dropped -1.8% mom in August.

There is no more economic data scheduled for today but there are some important ones ahead. On Tuesday, RBA will release minutes. Wednesday will feature US existing home sales and FOMC minutes. Thursday is a busy day with China and Eurozone PMIs featured, as well as Canada retail sales. Friday will feature UK GDP revision, Canada CPI and US new home sales. Also, focus will be on the Jackson Hole Symposium to start on Thursday.

Latest CFTC data showed improvements in net positions in Euro, yen and Aussie on August 13 comparing to the prior week. Euro net longs rose to 16.1k, up from 6.1k. Sterling net short was relatively unchanged at -46.5k. Yen net short dropped to -74.5k, from -80.2k. Aussie net short dropped to -62.7k, from -76.8k. Canadian dollar net short was relatively unchanged at -9.1.